Secrets of the Fed Editorial of The New York Sun | January 15, 2012

The Fed is starting to remind people of Woodrow Wilson’s son-in-law, William Gibbs McAdoo. We had a note about McAdoo over the weekend from James Grant, editor of the Interest Rate Observer. It seems that McAdoo, during his campaign for the Democratic presidential nomination in 1924, kept putting his foot in his mouth. “What your friends want out of you is silence,” one of McAdoo’s supporters supposedly told him, “— and damn little of that.” Our sentiments exactly. The Federal Reserve, not to mention the rest of us, would be better off without the all the words that pour from its transcripts, press conferences, and minutes. After the release of the transcripts this week, the New York Times quoted one professor, Justin Wolfers of the Unviersity of Pennsylvania, as saying the latest disclosures were embarrassing not only for the Fed but for all of economics. In any event, the Fed’s words are a poor excuse for money. We say: Let the Fed stand mute. For however much time we still have a Fed, let us discover its policies the way we discover the properties of a black hole, not by the light that comes out — none does — but by the behavior of nearby objects. It would be more credible for the Fed and more efficient for the market, until the day comes when we can get back to constitutional money defined as a given number of grains of specie.